Link to slides below text.
FT has strong view on european equities…
- Private consumption led recovery (Slide 10) i.e more potential on the export side if EUR weakens.
From big budget deficit in peripheral countries to surplus since 2010 for the most (Except Spain) (Slide 12).
European growth better relative to US in 2016. (Slide 17).
SEK = Opportunity relative to EURO (Slide 18) : Risksbank to hike rates sooner tha later EUR-SEK spread to go down.
Earnings in Europe at crisis low (2010) !!! Not the case for US .. (Slide 20). Momentum improving for EM earnings.
European recovery well established : Unemployment at lows / IFO / Manufacturing PMI / GDP (Slide 21)
Support for EURO improving vs 2016 amongst Member states (Slide 22)
Huge potential recovery for european corporate earnings still 46% below pre-crisis peak….(Slide 23)
… & at all time lows as % of MSCI World. (Slide 24)
European Corporates sales recovery … earnings not yet … Margins will improve once we have more inflation. (Slide 25)
P/B at 1.8 in the lower range for last 20 years. (Slide 27)
Normalised PE at 18.50 cheaper vs US / DM / 30Y average of 21.50. (Slide 28)
Headwinds & Tailwinds for next 12m. (Slide 33)
Templeton EUROLAND Equities fund is already in our « Best in class « Funds list”
… and on EM equities.
- GDP/Capita : Huge room for growth !!! (Slide 36)
EM GDP( and trade) in % vs World more than doubled in 20 years .. just the beginning.. (Slide 37)
EM demography = ++++ (Slide 38)
Internet usage : Amongst the top 10 countries, 5 are EM . (Slide 39)
EM Ccies Index … 22% lower compared to 2002 and 24% lower than 2009 at bottom in 2016 // Today still nearly 40% lower to 2011 top. (Slide 44)
EM equities trading at discount vs DM .. PE 12.40 vs 16.50 , PB 1.8 vs 2.3 with higher earnings growth 14.4% vs 10.40% and higher margins. (Slide 45)
EM increasing Tech domination : (Slides 49 and follow.)
EM fundamentals sounder than DM : Banking system , Public & corporate debt , cap to asset ratio. (Slide 54 and follow)
EM key issues : Fed / US stimulus policy/ USD / Korea / China adjustments .
Templeton Emerging Markets Equities fund : Last 2 years performance was very good mainly since Manager change back in 2014 .
Trades since last update dated April 17th :
April 18th : USO / WTI Oil tracker – Take profit limit reached at opening on April 18th @ USD 11 – Plus 7,33% in 1 month – April closing @ USD 10,24.
April 18th : Take profit limit reached on Coeur Mining @ USD 9,85 – Bought @ USD 8,12 1 month ago.
April 19th : Take profit limit reached on Easy Jet @ GBp 1090p – Return of 23%+ including dividend.
April 25th : Stop Loss at 1 EUR reached on NDX put certificate. See April 25th post “NDX no sign of tiring” … US markets broke out and continued higher… a hedge for nothing …
April 25th : Buy 0,5 unit in the CITI Turbo Call Cac 40 KO 4151 @ EUR 11,52 – See same date post.
Tactical Portfolio : Current holdings
Tactical Portfolio : Closed positions
The French Index celebrated Macron Victory in first round of election with a quite significant breakout as shown in chart below. The red downtrend line that connects major tops in 2000, 2007 and 2015 has been broken the day after the election first round : This is a significant move and will remain so as long as market does not retrace this positive move in the short run which i do not believe will happen at this stage.
One can put in place a tactical trade set up with limited risk here : Buy the french market – ETF, individual stocks, certificates, .. – and place SL below the former resistance which lies around 5150. Risk of around 3%.
ACTION TACTICAL PORTFOLIO : Buy CITI Turbo Call Knock Out 4151 Certificate / Leverage at current price of 11,53 EUR is 4,59 (1% investment gives you a 4,59 exposure to CAC40 )- ISIN DE000CX7L4F3 . Action taken : Buy 0,50 unit at current price of 11,52 EUR -CAC40 base level 5275- / Buy another 0,5 unit in case of market short term consolidation around 5180 -5200 – Limit at 10,75 EUR valid end of week.